The news that mattered this morning

Pressure building - The little-known but high powered Council of Financial Regulators met yesterday afternoon in Wellington to discuss whether our banking system is as immune from the Australian banking system's problems as the New Zealand banks say they are.

It includes the head of the Treasury, Gabriel Makhlouf, the chief executive of the Ministry of Business, Innovation and Employment, Carolyn Tremain, the governor of the Reserve Bank of New Zealand, Adrian Orr, and the chief executive of the Financial Markets Authority, Rob Everett.

Early yesterday Everett revealed he and Orr had pulled in the big New Zealand bank CEOs on Monday to demand they prove their noses are clean. See more detail from Pattrick Smellie on Newsroom. Pattrick also rightly points out in his weekly Stuff column that the banks here face potential conflicts of interest daily in their promotion of their own Kiwisaver schemes to clients. The FMA is investigating a recent ANZ case where a teller recommended a client put all their $450,000 of savings in an ANZ fund. This story is not going away.

NZ misses out - US President Donald Trump yesterday delayed for a month his plan to put tariffs on imports of European, Canadian and Mexican steel, but agreed exemptions for Argentina, Brazil and Australia. (Reuters) New Zealand missed out on being exempted. Prime Minister Jacinda Ardern said she was disappointed.

The K3 problem - A New Zealand Herald investigation by Kirsty Johnson and Chris Knox has found that historic data on sex crimes was deeply misleading for decades because police wrongly coded reported incidents as K3 for no offence disclosed or no crime. The practice has now been changed, resulting in more accurate pictures of sex crime reporting (much higher) and resolution rates (much lower). Well worth a click.

Still 3 hikes - The New Zealand dollar fell to a four month low and below 70 USc for the first time this year after the US Federal Reserve announced this morning it had upgraded its inflation outlook and indicated it was on track for three more hikes in the US Federal Funds Rate this year. (Reuters) That would make the US dollar more attractive than the New Zealand dollar, given our interest rates are expected to remain on hold until well into next year (more on that below).

Nixed - Electoral data miner Cambridge Analytica and its parent SCL filed for bankruptcy protection overnight after the loss of clients and a vast increase in legal fees. The firms were exposed as having harvested data from millions of Facebook users to help get Donald Trump elected and to help the Brexit campaign win. CEO Alexander Nix resigned earlier this year after being exposed in a secret camera sting as bragging about winning the elections for Trump and Brexit and offering to bribe and blackmail politicians. (Reuters).

2. Yet again, the wage growth is anemic

Jobs growth remained solid in the March quarter and the unemployment rate edged down to 4.4 percent, which was its lowest level since the end of the previous Labour Government in the December quarter of 2008.

But yesterday's labour force figures from Statistics New Zealand showed yet again that the most closely-watched measures of wage growth remain tepid at best. Private sector Labour Cost Index inflation, which strips out the effects of promotions and skill changes, rose just 0.3 percent in the quarter and was unchanged at 1.9 percent for the year. This is lower than most economists expected and lower than the 2.1 percent in the Reserve Bank's most recent forecast. Economists noted the lack of follow-through from last year's big increase in the minimum wage and the massive increases in wages for aged care workers because of the pay equity settlement.

This is great news for borrowers because it allows the Reserve Bank to leave the Official Cash Rate on hold at its record low of 1.75 percent until well into next year. But it's not fantastic for wage earners.

It also begs two questions. Firstly, does this mean the economy is not at full employment as estimated by the Reserve Bank? If not, then should the Reserve Bank actually be cutting the OCR to push unemployment even lower? And secondly, does this mean something is changing in the guts of the economy to allow faster economic growth without inflationary pressures? High migration, the abuse of migrants and new technology that is globalising the services industries are often cited. But it is not reflected in the official attempts to measure full employment.

That estimate of full employment is even more important now new Reserve Bank Governor Adrian Orr has a Policy Targets Agreement that tasks him with "contributing to supporting maximum sustainable employment."

There is plenty of space for caveats, interpretation and sidesteps in that phrase, but it does elevate the importance of maximum sustainable employment.

We'll find out more next Thursday after what Orr thinks about "maximum sustainable employment" and whether we're there yet when he presents his first Monetary Policy Statement.

There are definitely still plenty of people looking for work (119,000 were unemployed and 348,000 were looking for more work in the March quarter) and plenty of workers haven't received a pay rise recently (49 percent saw no rise in the last year, as shown in this ASB chart below).

3. A bureaucrats' guide to safe leaking

Newsroom's Sam Sachdeva has been dogged his OIA requests over the handling of revelations about Winston Peters' pension over-payments.

Today he has written from the results of those OIA requests about how a public servant who inappropriately looked at Winston Peters’ superannuation records was the subject of an HR investigation.

The OIA results also effectively show how the Government tries to hunt down a leaker. It's like a spy-hunter's guide on how to avoid being detected.

Sam writes that using a personal phone or computer - or better yet, a face-to-face encounter - may be the best way to share information while avoiding detection.

4. Shippers push hard against labour laws

Newsroom's National Affairs Editor Shane Cowlishaw is following the Government’s Employment Relations Amendment Bill through the Education and Workforce Select Committee, which met yesterday.

He reports the shipping industry is worried the seas could become a dangerous place for both staff and passengers if these employment law changes are adopted.

Annabel Young, executive director of the New Zealand Shipping Federation, told the Education and Workforce Select Committee she was particularly concerned about staff being reinstated to their positions where it was inappropriate.

Under the bill, reinstatement will become the primary remedy in personal grievance cases.

5. Cannabis exporters want better bill

Newsroom's Thomas Coughlan has been following the Misuse of Drugs (Medicinal Cannabis) Amendment Bill through the Health Committee and yesterday covered submissions from those who want create big new businesses, as happened in the United States and Canada.

He reports New Zealand's aspiring cannabis export industry is calling for the removal of an export ban to foster domestic suppliers of medicinal cannabis for the terminally ill.

Two industry players argued before the select committee considering a bill to decriminalise the use of medicinal cannabis that the local industry would not be able to supply New Zealanders as the bill stands currently.

The bill needed to ensure local products could reach the market quickly, and the removal of the ban would encourage the development of products here, the select committee was told.

One submitter said it could take up to a decade to produce pharmaceutical grade medicinal cannabis locally, if the Government uses an Australian-style pharmaceutical approach once the bill is passed.

The legislation as currently drafted acknowledges that most cannabis products do not meet “quality and efficacy requirements” of therapeutic product regulators like Medsafe. It gives the Health Minister the ability to establish minimum standards for therapeutic cannabis products.